A new Best’s Market Segment Report, titled, “Market Segment Outlook: Peru Insurance,” states that the outlook also recognizes the industry’s ability to withstand volatility in the local financial markets. Peru’s buoyant economic growth has slowed since 2018; however, fiscal and monetary discipline has allowed the government to finance its current account deficit through its financial account, given its ability to issue favorable long-term public sector borrowings and the receipt of foreign direct investment in key industries. Peru’s economic stimulus package aims to contain the spread of the COVID-19 epidemic, and in a second phase, reactivate the economy by providing liquidity through credit facilities to small and medium-sized enterprises.

As of December 2019, Peru’s insurance market was the seventh largest in Latin America, with USD 4.2 billion in premiums; Peruvian companies underwrite around 78% of insurance policies in the country, despite constituting only a quarter of all participants. Non-life lines tied to private and public investments will be pressured temporarily, as budgets prioritize liquidity in favor of new projects, limiting the growth of new policies in fire, surety, cargo and liabilities. Premium renewals may slacken, although awareness of health risks could provide major medical policies some momentum.

AM Best expects the country’s attractiveness for local and foreign investments to help mitigate and bolster the recovery factors that drive and provide stability to the insurance market over the short term. AM Best will continue to monitor the financial markets for any major disruptions that could adversely affect the insurance industry’s solvency.

AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.